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of <h1>Tribunal upholds penalties on Angel Broking for market manipulation violations</h1> <h3>Angel Broking Private Limited Versus Securities and Exchange Board of India</h3> Angel Broking Private Limited Versus Securities and Exchange Board of India - TMI Issues Involved:1. Imposition of penalties under SEBI Act for violations of PFUTP Regulations and Stock-Brokers Regulations.2. Allegations of self-trades and creating artificial volumes.3. Appellant's defense and explanation of trades.4. Analysis and findings of the Adjudicating Officer (AO).5. Reference to case laws and precedents.6. Quantum of penalty and its justification.Detailed Analysis:1. Imposition of Penalties:The appeal was filed by Angel Broking Private Limited (ABPL) against the order of the Adjudicating Officer (AO) of SEBI, imposing penalties of Rs. 10 lakh each for violations of PFUTP Regulations and Stock-Brokers Regulations. The penalties were imposed under Section 15HA and Section 15HB of the SEBI Act.2. Allegations of Self-Trades:SEBI investigated trading in the scrip of Sterling Green Wood Limited (SGWL) and found that ABPL executed self-trades for its client AIPL during the investigation period. These self-trades were alleged to have created artificial volumes and manipulated the price of the scrip.3. Appellant's Defense:The appellant argued that the self-trades were coincidental and resulted from the jobbing/arbitrage activities of multiple dealers operating independently. They claimed that the trades were executed at prevailing market prices and did not create misleading appearances or manipulate the price discovery mechanism.4. Findings of the AO:The AO found that ABPL assisted AIPL in placing fictitious trades/self-trades, violating PFUTP Regulations and Stock-Brokers Regulations. The AO systematically analyzed the order patterns and concluded that the trades were intentional and aimed at creating artificial volumes. The AO also noted that ABPL's explanation of independent trading by dealers was not acceptable, as the trades did not follow the basic rule of buying cheap and selling costly.5. Reference to Case Laws:The appellant cited several cases, including Chirag Tanna vs. SEBI, H.J. Securities Pvt. Ltd. vs. SEBI, Smt. Krupa Sanjay Soni & Anr. vs. SEBI, and Arcadia Share and Stock Brokers Pvt. Ltd. However, the AO distinguished these cases based on the facts and circumstances of the present case. The respondent also cited cases like Anita Dalal vs. SEBI and others, which supported the findings against the appellant.6. Quantum of Penalty:Considering the seriousness of the violations, the AO imposed exemplary penalties on the appellant. The AO noted that self-trades do not result in a change of beneficial ownership but create false volumes and manipulate prices, sending wrong signals to investors. The AO also considered the appellant's past conduct and concluded that the penalties were justified.Conclusion:The Tribunal upheld the findings of the AO, concluding that ABPL executed self-trades with full knowledge and intent to manipulate the market. The appeal was dismissed, and the penalties imposed by the AO were deemed appropriate based on the facts and circumstances of the case.
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